Thursday, September 01, 2011

Management Pay Vs. Federal Income Taxes

This is interesting:

At least 25 top United States companies paid more to their chief executives in 2010 than they did to the federal government in taxes, according to a study released on Wednesday.
The companies — which include household names like eBay, Boeing, General Electric ( is a joint venture of Microsoft Corp. and NBC Universal, which is jointly owned by Comcast Corp. and General Electric) and Verizon — averaged $1.9 billion each in profits, according to the study by the Institute for Policy Studies, a liberal-leaning research group. But a variety of shelters, loopholes and tax reduction strategies allowed the companies to average more than $400 million each in tax benefits — which can be taken as a refund or used as write-off against earnings in future years.
The chief executives of those companies were paid an average of more than $16 million a year, the study found, a figure substantially higher than the $10.8 million average for all companies in the Standard & Poor’s 500-stock index.

Why would it be interesting? Because we never hear firms trying to make the top executives cheaper, even though they always try to make their taxes go away. Though I'm sure that those high salaries and bonuses are negotiated, the vast amounts spent on them are not a concern similar to taxes. My guess is that the reason is simply with the executives being the people who decide what firms should lobby for. They are not going to lobby against their own compensation packages.

An arch-conservative would argue that payment for executives' services is fully justified by their great and rare talents, whereas paying taxes amounts to highway robbery. But even executives who bankrupt their firms get platinum parachutes studded with emeralds, and the government does indeed provide firms gigantic services: The channels which are used to sell and buy products, the laws which protect the firms against highway robbery, the educated populace which buys the products and makes them, the roads and railways which are used to ship tangible products. And so on and so on.

I guess this story struck me most because it's such a good example of the increasing oligarchy in this country.